Las Vegas Sands Corp. (LVS) falls on Q1 earnings

May 9, 2011 8:26 PM

Bad luck at the tables in both Las Vegas and Singapore caused quarterly earnings of Las Vegas Sands Corp. (LVS) to fall below the level expected by gaming analysts, thus causing the company’s shares to take a dramatic drop shortly after the results were announced.

For MGM Resorts International (MGM) improvements in results from Las Vegas casinos, and especially in Macau, caused a rush of enthusiasm in the company’s shares as the company said the improvements resulted in a smaller loss for the first quarter.

The loss for the quarter that ended on March 31 was $89.9 million or $0.18 per share compared to last year when the loss was $96.7 million or $0.22 per share. When one-time charges were eliminated from the results, the company experienced a loss of $0.16 per share.

Contributing to the improved performance, said analyst Steven Ruggiero of CRT Capital, was a 16 percent increase in REVPAR (revenues per available room) at the company’s Las Vegas properties. He said the improved trend would result in continuing room price improvement. He raised his target price for the company’s shares to $18.50 each.

"Our improved results are broadly based throughout our resort portfolio," said Jim Murren, chairman and CEO. "Results from joint ventures reflected record quarter improvements at both MGM Macau and CityCenter," he added.

MGM Macau, a joint partnership with Pansy Ho, saw operating income rise by 158 percent with MGM receiving about $31 million from the profits. The partnership however, is undergoing a restructuring with Pansy Ho providing 20 percent of her shares to a Hong Kong IPO and another one percent to MGM, thus leaving her with 29 percent.

The IPO, expected to produce nearly $1 billion, of which Ho would receive $300 million, is under review by Hong Kong Stock Exchange officials.

In its report, Las Vegas Sands reported revenue of $2.11 billion, a 50 percent increase from the previous year, and net income of $228.1 million, up from a loss of $28.9 million in 2010. Earnings per share reached $0.37, shy of the $0.43 expected by the majority of analysts.

 As analysts questioned the Singapore results, Sheldon Adelson, chairman and CEO, remarked, "You’re talking about very substantial amounts of money. Pretty soon Singapore will deliver more (earnings) than the entire Las Vegas Strip."

Turning to Macau, Adelson noted that LVS has "the largest footprint in the largest gaming market in the world and we are eager to take advantage of the significant organic growth opportunities in front of us."

The company’s Macau operation saw revenue growth of 22.6 percent to $1.16 billion while revenue from its single casino in Singapore was $584.9 million.

Las Vegas’ Venetian and Palazzo properties produced revenue of $305.1 million, down about eight percent from last year’s first quarter.

A move that will beef up its Las Vegas management team will bring the former chief operating officer of Gaylord Hotels as the new president of the Venetian and Palazzo.

John Caparella will be taking over from Rob Goldstein, who was promoted to president of the company’s global affairs.

Caparella will bring 30 years of experience in the hospitality industry with him when he assumes his Las Vegas position.